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AUGUST 14, 2017

‘Consensus on Teesta needed’

  • Indicating that India has not been able to reach a consensus on the sharing of Teesta river water, Indian High Commissioner in Bangladesh Harsh Vardhan Shringla said the country needs to discuss the issue more extensively.
  • “Teesta is an outstanding issue. We have made it clear that it requires more consultation within our own country,” said Mr. Shringla, on the sidelines of a recent event in the city organised by the Indian Chamber of Commerce.
  • He referred to the India-Bangladesh Land Boundary Agreement and said that it required many rounds of talks to resolve.

Assam floods worsen

  • The flood situation deteriorated on Sunday in Assam, where the Army was called out for rescue operations as 10 more people were killed and 22.5 lakh affected in 21 districts.

200 Indians stranded

  • Nearly 700 tourists, including 200 Indians, stranded at a popular tourist district in central Nepal owing to flooding and landslips triggered by heavy rainfall.
  • Heavy rainfall has been lashing Nepal for the past three days, swelling several Himalayan rivers beyond the danger mark.

No palm trees may lead to more lightning strikes, warn experts

  • The increase in number of deaths due to lightning strikes in Odisha may have something to do with the gradual disappearance of palm trees from the village landscape, experts said.

Declining density

  • One reason, according to experts, may be the declining density of tall trees, which act as natural lightning rods in the flat rural landscape. Palm trees are often struck by lightning since they are usually the tallest objects in villages.
  • Parts of the palm tree were traditionally used to make thatched roofs and umbrellas, but lost popularity after the rise of concrete structures and ready-made umbrellas. Palm trees are, however, still in demand in Puri as the leaves are used to make packets for prasad.

A deadly disease explained

What is Japanese Encephalitis?

  • Japanese Encephalitis (JE) is a mosquito-borne viral infection of the brain. There is, however, a debate about the origin of the disease and whether it is enteroviruses — caused by virus found in pigs and birds. There is no cure for JE.

Why only Gorakhpur?

  • JE epidemics are reported from many parts of India however, it is highly endemic in Eastern Uttar Pradesh.
  • Gorakhpur is a nodal point not because there are more cases in the district but because the only tertiary care centre with 100 beds dedicated to JE is in Gorakhpur. So, cases from nearby districts like Kushinagar and Deoria districts are referred to there for treatment.

Why does vaccination not work?

  • It is a misconception that the JE vaccine will eradicate the disease in a short span of time.
  • While vaccination is critical, at the heart of U.P.’s crisis is lack of infrastructure, unclear data on disease burden and a lack of access to clean water and toilets.
  • In March, the State government launched a JE vaccination drive in 38 districts in U.P. but it was not supplemented with access to clean water and sanitation.
  • The efficacy of the JE vaccine is between 85-90%.
  • The lessons learnt from polio vaccination drives is that people left out of each round of vaccination are the most disenfranchised, most likely to take ill and least likely to seek medical care in time.

The Gorakhpur mystery..

  • JE is one kind of encephalitis which falls under a spectrum of diseases called Acute Encephalitis Syndrome (AES).
  • Doctors in endemic regions in U.P. have found cases with similar symptoms but without the virus, leading to some debate over the cause of the disease.
  • Due to lack of research, U.P. government gets their burden of disease data from hospitals, essentially leaving out cases that do not come into public health facilities.
  • This results in wrong forecasts as the government budget for next year’s JE intervention. Because of the lack of reliable data & research, UP’s policy intervention to curb JE cases has failed for decades.

Making paddy cultivation easy and profitable

  • To make paddy cultivation easy and better yielding, the Agriculture Department has introduced a fully-mechanised Laser Land Levelling (known as Laser Levelling) machine. It is letting it out on rent basis to farmers particularly paddy growers to level paddy fields and smoothen the land surface from average elevation.
  • The department is letting out on rent the Laser Levelling machine at Rs. 900 per acre.
  • The rent has been kept low to encourage farmers to use machines in paddy cultivation and it would be increased at a later stage based on utilisation and demand.
  • The land levelling machine would elevate the surface of the land with a certain degree of desired slope using a guided laser beam throughout the field.
  • Using the Land Leveller was technically perfect compared to manual methods of cultivation.
  • Laser levelling of a field is accomplished with a dual slope laser that automatically controls the blade of the land leveller to precisely grade the surface to eliminate all undulations tending to hold water.
  • The receiving system detects the beam and automatically guides the machine to maintain proper grade.

Other benefits

  • On the other benefits, Chetana Patil, Joint Director of Agriculture Department, told The Hindu that using the Laser Land Levelling would aid farmers in many ways: it helps reduce time and water for irrigation and ensures uniform distribution of water, less water consumption in land preparation, precise level and smoother soil surface, uniform moisture environment for crops, lesser weeds in the field, good germination and growth of crop, uniformity in crop maturity, reduced seed rate, fertilizers, chemicals and fuel requirements.

Sikkim’s yaks in the clouds have few riders this year

  • “Between January and May, when trouble broke out in Darjeeling and Dokalam, we had the highest tourist footfalls in Sikkim,” he said, citing over one million arrivals. Sikkim’s Tourism Minister Ugen T. Gyatso Bhutia put it at 1.2 million. “But now it has come down to virtually zero,” said Mr. Bardewa.
  • The Tourism Minister, however, said they are “waiting” for things to normalise. “If the Gorkhaland agitation is solved, 70% of the problems will be addressed,” Mr. Bhutia said.

“A constant irritant”

  • However, former Chief Secretary Sonam Wangdi, said even if the Gorkhaland issue was resolved, the lack of a border settlement between India and China will remain “a constant irritant.” Meanwhile, Lakpa Sherpa said he would have to “get rid of Badal” if the stand-off continues.

Almost every household has a weapon in this river-belt area

  • The Bhima river belt and country-made pistols have remained virtually synonymous for decades.
  • This belt comprising at least a dozen villages in both Sindgi and Indi taluks has witnessed bloodshed and dozens of shoot-outs in which several people have died.
  • Rivalry is the main reason behind these killings, and such shoot-outs have become a major headache for the police.
  • It is believed that almost every household in these villages possesses at least one country-made pistol despite knowing the fact that it is illegal. Sources in the police said that a country-made pistol and six rounds of ammunition cost around Rs. 10,000. For a Rs. 1,000 more, a few extra rounds of ammunition could be bought easily.
  • The sources said that Maharashtra and Madhya Pradesh are two sources from where the country-made weapons are coming, without any hindrance.

‘We’ll solicit opinion on Netravathi project

  • Food and Civil Supplies Minister U.T. Khader on Sunday said that the government will gather public opinion before going ahead with the proposed project to pump excess Netravathi water to Bengaluru.

Converting risk and uncertainty to profit

  • Most retail investors think that stock markets are highly risky and prospects of the company underlying the shares are uncertain. Nothing can be further from the truth.
  • The problem for an investor is the stock price of such a company is normally always fully priced. This does not leave much scope for price appreciation unless the profit to earnings ratio expands due to general buoyancy in the markets.
  • However, under certain circumstances, even stable companies stumble — resulting in the stock price plummeting and becoming available for highly tempting valuations.
  • In 2013, the manufacturers of India’s largest plastic water tanks, Sintex Industries, was in trouble because it had borrowed in U.S. dollars to buy two companies in Europe. The crash in the value of Indian Rupee meant that the principal amount to be repaid went up significantly.
  • Over time, the business of large companies is stable and will show moderate growth. However, investors, in anxiety and panic, will drive down stocks such that the valuation becomes attractive and is available at minimum risk.

How low can interest rates go?

  • The interest rate on the one-year term deposit in India’s largest bank has nosedived from 9% in July 2014 to 6.5% now. Interest rates on the three-year term deposit have dropped from 8.75% to 6.25%.
  • In pegging down their deposit rates, banks have taken their cues from the RBI. The central bank has pared its repo rate, the rate at which it lends overnight money to banks, from 8% three years ago to 6% now.

How far?

  • Looking back at trends in Indian interest rates over the last fifteen years suggests that the debt markets, just like the stock markets, go through cycles.
  • The repo rate, which hovered at 9% in April 2001 drifted down to 6% by March 2004, but reversed direction to recapture the 9%peak in July 2008. But, with the global credit crisis hitting India and recessionary trends in the economy, RBI was forced to effect a swift and brutal reduction in rates again from 2008. This time around, the repo rate dropped from 9% in July 2008 to 4.75% by April 2009.
  • As growth limped back and inflation began rearing its head, the RBI embarked once again on a hiking spree, taking its rates from 4.75% in 2009 to 8% in 2012. The years 2012 to 2014 saw a sideways crawl in rates. But with inflation moderating and the economy going into slow motion, RBI pruned its repo rate again, from 8% in 2014 to 6% by August 2017. In its recent policy reviews, RBI has shown reluctance to hack away any further, issuing warnings about inflation risks.

Predictable band

  • This brief history of interest rates tells us two things.
    • One, benchmark interest rates have broadly gyrated in a band of 6%-9% in the last fifteen years. When the rate sinks to the lower end of the band, circumstances conspire to flag off the next rate hike cycle.
      • Rates have dipped below 6% only under extra-ordinary circumstances, such as the global credit crisis. When they do, they have seldom stayed there for good. In 2004-05, the policy rate stayed at 6% for 18 months before the uptrend started. In 2009-10, it stayed below 6% for 15 months before a turnaround.
    • Two, India’s central bank prefers to prioritise inflation targeting over growth. It is usually prompt with pre-emptive rate hikes to quell inflation, but doesn’t hurry to cut rates in a downturn.
      • Two years ago, RBI’s role as an inflation warrior was further cemented by the Monetary Policy Agreement it has inked with the Centre. The Agreement specifically tasks RBI with ensuring that retail inflation stays within the 2%-6% band. With this new framework in place, RBI is likely to maintain an even closer vigil on inflation and undertake rate cuts even more sparingly than before.
  • This is probably why, despite consumer price inflation dipping below its 4% target a good eight months ago, RBI held off further rate cuts for almost ten months until it acted this month.

Variables considered

  • Current inflation rates apart, the central bank considers two other variables in its rate decisions.
    • The first is the need to maintain positive real interest rates for savers. RBI officials have indicated that for savers to prefer financial instruments, it is desirable to maintain a real interest rate of anywhere between 1.25% and 2% above inflation.
      • Now, while recent inflation readings in India have been at the 2% mark, sustainable inflation rates are believed to be much higher. RBI’s own projections expect inflation rates of 3.5%-4.5% for the second half of this fiscal.
    • The second variable that RBI considers is the inflation expectations of households for the future. RBI’s recent surveys show that these expectations remain quite elevated despite the rock-bottom official inflation readings.
      • In the latest June survey, households perceived current inflation rates to be 6.4% and expected inflation one year ahead to be at 8.6%. Unless those expectations fall sharply, this puts a floor to rate cuts too.

GIS-enabled portal maps land-related information

  • In a little over six months beginning February, the Centre has brought out an online database of more than half a million hectares of land assisting industry.
  • The Geographic Information System-enabled database also has details of close to 3,000 industrial parks/clusters, as well as area-wise availability of agricultural/horticultural crops, and mineral production.
  • The portal will soon incorporate information on warehouses, power-grid and financial institutions as well as the demand for industrial infrastructure captured on the basis of applications from entrepreneurs for projects.
  • The exercise is to eliminate the information asymmetry that is currently adversely affecting the country’s industrial policy-making and investments in the manufacturing sector.

Boosting employment

  • The development comes in the backdrop of the Centre firming up a new industrial and manufacturing policy to push up the contribution of the manufacturing sector in India’s GDP to 25% by 2020 from the current level of about 16%. The aim is to make India a global manufacturing hub and in the process generate employment locally. The details on the database about government-approved technical institutions will indicate the availability of skilled and semi-skilled talent.
  • It currently has specific area-wise details in each state on industrial parks/clusters, the focus sectors, common facilities available for industry, industrial land in use and available industrial land, approved and pending projects, infrastructure including state/national highways, airport, ports and railway stations and electricity, Central/state government incentives, investment/employment-targets and what has been achieved, range of land sale price and lease/rent rates, waste disposal facilities, and contact details of nodal officials.
  • The database also has information on the distance from airport/port to each industrial area/cluster and a satellite map view of the area.
  • Data is available on agricultural crops such as fibre crops, food grains, oilseeds, plantation crops, pulses and spices, and horticultural crops, including most fruits and vegetables. Also available are the details of mineral production including that of agate, apatite, bauxite, chromite, copper, diamond, flint stone, fluorite, garnet, gold, graphite, iron ore, kyanite, lead and zinc ore, lead, limeshell, limestone, magnesite, manganese ore, moulding sand, phosphorite, selenite, sillimanite, silver, sulphur, tin, vermiculite, wollastonite and zinc.
  • The database is being developed by the Department of Industrial Policy and Promotion (DIPP) and the National e-Governance Division in the Ministry of Electronics and Information Technology as well as the BISAG – an institute for space applications and geo-informatics under the Gujarat Government.

Investors ‘shell’ shocked over SEBI order

  • A recent order from markets regulator SEBI brought to a halt trading in more than 170 actively traded stocks on the stock exchanges.
  • These firms formed part of a larger group of 331 ‘shell’ companies whose names the Minsitry of Corporate Affairs (MCA) shared with the regulator for initiating action.
  • The order issued by the Securities and Exchange Board of India (SEBI) last week put at risk investor wealth amounting to almost Rs. 13,000 crore.
  • A look at the financials of the companies show that most of them reported at least some income in the last financial year with a few even reporting a positive bottom line.
  • Interestingly, eight entities, including the biggest three ‘shell companies,’ have already managed to obtain a stay on the trading restrictions by way of interim relief from the Securities Appellate Tribunal (SAT), that observed in clear terms that the capital market watchdog passed the diktat without an iota of investigation.

Entity verification

  • While the capital market regulator has begun hearing the companies on an individual basis, the proceedings and an order — even in the form of an interim relief — might take time due to the sheer number of companies and the lengthy verification process.
  • SEBI has also advised the exchanges to appoint an independent auditor to audit such listed firms and if necessary, even conduct a forensic audit to verify the business credentials of such firms. If the exchanges are not able to to find appropriate credentials, they can initiate delisting proceedings against the company, as per the order.

Minister wants AI arm kept out of divestment process

  • Air India Engineering Services Limited (AIESL), the maintenance, repair and overhaul (MRO) unit of Air India (AI), should be kept out of the disinvestment process of the national carrier, said Nitin Gadkari, Road Transport and Highways Minister.
  • Mr. Gadkari, who is a part of a Group of Ministers (GoM) formed to decide the modalities of sale of AI and its subsidiaries, said AIESL was a profitable business and the government should invest in such companies.

Loss-making entity

  • India’s oldest private sector MRO service provider AirWorks had already expressed interest in acquiring a stake in AIESL. AIESL had been incurring losses since its inception in 2013 when it was carved out of AI as a separate business unit. In 2016-17, AIESL’s losses rose about 17% to Rs. 653 crore as per provisional estimates.

White nationalist rally turns violent

  • A White nationalist rally in Charlottesville, Virginia, 150 km south-west of the U.S. capital, turned violent on Saturday, claiming the lives of a 32-year-old woman and two police officers and leaving 19 people injured. The violence sparked national outrage that was aggravated by President Donald Trump’s response that appeared to qualify his condemnation of the incident.
  • During the day, clashes broke out between White nationalists and those opposing them, with local officials declaring the ‘Unite the Right’ rally — called by a collection of White supremacist and neo-Nazi groups — an “unlawful assembly”, and Virginia Governor Terry McAuliffe imposing a state of emergency. As the crowd scattered, a car allegedly driven by 20-year-old Ohio resident James Alex Fields rammed into a group counter-protesters, leading to the death of a woman.

‘In support of Trump’

  • The former leader of the racist hate group Ku Klux Klan, David Duke, said the rally was in support of Mr. Trump’s agenda. “This represents a turning point for the people of this country…We are determined to take our country back. We are going to fulfil the promises of Donald Trump. That’s what we believed in, that’s why we voted for Donald Trump. Because he said he’s going to take our country back. That’s what we gotta do,” he said.